Instead, Osborne has succeeded in hiring one of the best-qualified of all the Queen’s 137 million subjects — from a country that knows a thing or two about economic crises and how to handle them. Carney is not an academic like Sir Mervyn; he spent 13 years at Goldman Sachs and knows the banks and their tricks. He is anti-bailout and commands sufficient international respect to be made chairman of the G20′s Financial Stability Board.

Carney hails from a land of (comparative) fiscal sanity. The crash was global but there were no bust banks in Canada. Its troubles stand no comparison to those of the United States – and the secret was better regulation and a stronger commitment to sound money. There was no purblind regulation, no central bankers looking amazed at what the merchant bankers had been getting up to right under their noses.

Carney said recently that ‘The crisis has shaken the foundations of monetary economics, making this a great time to be an academic but a more challenging one to be a practitioner.’ You would not hear Sir Mervyn making the same statement. Nor would you hear him acknowledge the Austrian school of economics and its criticism that:

‘inflation targeting can actively feed the creation of financial vulnerabilities, especially in the presence of positive supply shocks. For example, in an environment of increased potential growth resulting from higher productivity, inflation-targeting central banks may be compelled to respond to the consequent “good” deflation by lowering interest rates. From the Austrian perspective, this misguided response stokes excess money and credit creation, resulting in an intertemporal misallocation of capital and the accumulation of imbalances over time. These imbalances eventually implode.’

When Carney said this, he made clear he does not regard himself as an Austrian.But in recognising such concerns – and admitting that inflation targeting is up for debate – he goes much further than his predecessor.

Carney knows Britain well enough. He was educated in Oxford and worked in Goldman Sachs from London for a while. His wife, a Brit, took Canadian passport. He’ll now take a British one. He’ll leave his job running Canada’s central bank in June – about a year early – and start in Threadneedle St in July.

It will, needless to say, be the first time a foreign national has run the Bank of England. But when you saw ex-civil servants like Gus O’Donnell throwing their hat in the ring, you knew we needed global help. In August, The Spectator’s leader had this to say:-

‘When the BBC was looking for a new director-general, it spent £150,000 on international headhunters only to promote an internal candidate. The search for a new Governor is vastly more important, given the outsourcing by the Treasury of so much British economic policymaking. George Osborne should scour the globe, and double the salary if need be. He badly needs help, and the right Bank of England governor could provide it. To find the right man or woman will perhaps be the single most important act of his chancellorship.’

Osborne gets a lot of stick from Coffee House. But this is a coup: he has poached a serving central bank governor and found a badly-needed new boom. I gather that the interview and appointment was done on the QT in London the weekend before last. Secrecy was vital; no serving head of a central bank could afford to apply for another job and then be rejected in public. Not that there was any risk of rejection: I understand that Carney was always Osborne’s no1.

It quotes from the statement by Goldman Sachs, released in response to the appointment of its former employee Carney as BoE governor, in which Goldman says:

“Relative to the conservative approach towards credit easing that the BoE has adopted under Governor King’s stewardship, it is … possible that Governor Carney may be prepared to engage in more ‘unconventional’ forms of QE.”

HellforLeather

Oh, and while Fraser and his Coffee House cohorts gurgle with joy over the Carney appointment, others who read this blog might be interested in the following, rather well-constructed recent piece on “Gideon’s Financial Wisardry”:

How long will it be before Mr C backs a Tory austerity measure this winter and the Guardian sticks up the headline ‘Chilly Con Carney’

“I’ll get me coat”

Memory babe

Maybe I’m morose but I’m reminded of a quote attributed to Warren Buffett:
“When a management team with a reputation for brilliance joins a business with poor fundamental economics, it is the reputation of the business that remains intact.”

Baron

In the days when banks could fail as any other corporate entity, the central bank had but one objective – to ensure price stability. That was it, and that should be it. To give the central bank any other powers is a mistake we will regret one day.

Daniel Maris

1. You told us Osborne was wonderboy – remember?

2. This guy was part of the problem – in Goldman’s when they were stoking up the sub-prime nonsense.

3. Canada has all sorts of advantages we do, not least being (with its Pacific seaboard helping) a source of raw materials for the booming Asian economies. It would be very odd indeed if Canada or its banks did as badly as the UK and its banks.

4. His medicine for the banks was the same as Darling’s medicine. In effect – state aid.

5. Are we really saying that with 60 plus million people and being the world’s leading financial centre we can’t find a UK citizen to lead the Bank of England? What does that say about our financial sector – and how much it is actually an employment bureau for the rest of the world…?

Youngsjyoung

It will take a very brave governor to push for interest rate rises when earnings are flat or in decline mortgage for closures will hit Tory fortunes hard

dalai guevara

Not at all difficult when recorded inflation is about to explode. If interest rates were thus not to rise, you would artificially create a nice little economy in itself – and it would be hard to explain how that would suit us.

http://elfnhappiness.blogspot.com/ eeore

Osbourne’s coup my backside. Like he had any choice in the matter.

kwestion.all

The Canadian economic cuts were made before the economic downturn, something that get’s overlooked in all the comments. It’s easier to do the cuts during an upturn. Well at least we will get to see what this guy is really made of.

Troika21

Well done to Osborne on this appointment, right decision.

Especially after ruling himself out before, but Mr Carney is the definitely the person to be put in charge.

http://twitter.com/D_Blanchflower Danny Blanchflower

Carney is a great appointment – I would have even appointed him. I dont often agree with George Osborne but in this case he has made a class appointment and should be congratulated. Credit where credit is due. Let’s hope he will come and sweep clean at the BOE and make them more transparent
Danny Blanchflower

dalai guevara

How interesting, someone is making a case for the theory that Osborne had any say in his appointment. How very interesting.

dalai guevara

Here we are: the FA realises the team is second rate, it just cannot win any trophies, never mind reach the final round. All that is available for selection to lead from a national pool are the likes of Allerdyce and Redknapp, so the choice is…Capello. Lord have mercy.

Justathought

Fraser you are spot on with your analysis and were right to call for a candidate search that went beyond Threadneedle Street. This was an excellent choice and shows that the Chancellor still has the magic touch.

Archimedes

This is good news.

http://twitter.com/Shinsei1967 Nick Reid

This, together with the leaking of Osborne’s imminent announcement that the UK will be signing up to the US’s FATCA regulations on tax haven disclosures, suggests Osborne finally getting to grips with the radicalism needed to do the job of Chancellor properly.

Kevin

I hope this analysis is correct, and that this appointment does not portend continued low interest rates and inflated house prices, as appear to exist in Canada.

Was the Australian governor unavailable? At least savers would find their bank rate more attractive.

MirthaTidville

Oh Blanchflower would never agree there, he wants interest rates nailed to the floor forever. So if he`s in favour, sadly I fear you are right

TomTom

The Canadian Central Bank took the mortgage book off the Big Canadian Banks which left them free to finance the current wild property boom which must bust. Go look at Vancouver and Toronto speculation……anyway Carney is ex-Goldman so it’s okay

George_Arseborne

Excellent appointment. British job for British citizens. Osborne has apply for his British citizenship. Any more immigration cap?

HooksLaw

Mr Nelson I suggest you change the name of the site to ‘UKIPhome’, leave an open thread, preferably with the simple catchy title ‘Common Purpose’, and then take a holiday.
There really is not much point in posting anything else, your clientèle are not reading it anyway.

Rhoda Klapp

I saw your own brand marmalade on the shelf at waitrose. At least I thought I did, but I had misread ‘thick cut’.

Colonel Mustard

Got you rattled eh?

Is Carney a graduate of CP?

FrenchNewsonlin

He’s certainly a GoldmanSachs disciple and that has Zero Hedge worried.

Noa

So tell me, without looking up mind! What were Ladbrokes odds on an increase beyond 7.5%?